But some investors worried stimulus could be delayed as House Democrats introduced a resolution to impeach US President Donald Trump, accusing him of inciting insurrection following a violent attack on the Capitol by his supporters.
“When markets are looking at something as critical as the governance of the United States, even a little bit of uncertainty can have a meaningful impact,” said Brad McMillan, chief investment officer at Commonwealth Financial Network in Waltham, Massachusetts.
“What does that do to the ability of the parties to work together to pass policy things like stimulus.”
McMillan said investors also worried about more attacks. The FBI has warned of possible armed protests being planned for Washington, DC, and at all 50 US state capital cities in the run-up to President-elect Joe Biden’s inauguration on January 20, a federal law enforcement source said on Monday.
“Generally speaking, Washington doesn’t make too much of a difference but since policy is influencing so much of what’s expected around the economy, this is kind of a unique time,” he said.
But with US Treasury yields rising on Monday and outperformance of economically-sensitive sectors such as energy and financials, Keith Lerner, chief market strategist at Truist Advisory Services in Atlanta, Georgia, said investors were still hopeful about stimulus.
“After last week the market is in a little bit of a digestion phase. Underneath the surface what you’re seeing continue is the reflation trade,” said Lerner.
“This is a continuation of the expectation of more fiscal stimulus.”
And along with wariness about Trump’s last nine days in office, Lerner also cited uncertainty ahead of the unofficial start of earnings season on Friday when banks such as JPMorgan report results.
After the market’s big run-up last week and in the last trading days of 2020, it is “somewhat impressive” there is not more profit-taking, he said.
Unofficially, the Dow Jones Industrial Average fell 0.3 per cent to end at 31,008.69 points, while the S&P 500 lost 0.7 per cent to 3,799.61.
The Nasdaq Composite dropped 1.3 per cent to 13,036.43.
Shares of Twitter tumbled after it permanently suspended Trump’s account. But it shares were still about 160 per cent higher than where they traded before Trump won the Presidential election in 2016.
Other Big Tech firms Facebook Inc, Alphabet Inc-owned Google and Apple Inc were also weak on Monday as they took their strongest actions yet against Trump to limit his social media reach.
